WTI drops to near $89.00 as OPEC+ holds November targets

West Texas Intermediate (WTI) oil price extends its losses for the second successive day, trading around $89.30 during Asian hours on Monday. Crude oil prices experienced a decline following an agreement by the Organization of Petroleum Exporting Countries and its allies (OPEC+) to maintain steady production targets for November. The decision aligned with widespread market expectations that further adjustments to output policy would be deferred until next year.

Key producers, including Saudi Arabia, Russia, Iraq, Kuwait, Algeria, Kazakhstan, and Oman, continue to pump well below their designated quotas, with overall exports running at just 60% to 80% of normal volumes due to ongoing export disruptions linked to the conflict involving the US, Israel, and Iran.

Geopolitical instability in the region escalated as Saudi-backed forces in Yemen launched a major military offensive to reclaim territory from Houthi forces. The action followed weeks of heightened tensions, during which the Iran-backed group captured the strategic Bab el-Mandeb strait. This key maritime passage between the Red Sea and the Gulf of Aden had been serving as a critical alternative bypass for Saudi oil shipments looking to avoid the Strait of Hormuz.

In response to global supply pressures, G7 nations agreed to release 100 million barrels of crude and diesel from emergency reserves, pledging to avoid energy export restrictions following pressure from US President Donald Trump. Despite the ongoing conflict, regional crude exports briefly spiked above pre-war levels in late September, reaching peak flows of up to 22.5 million barrels per day according to data from Kpler. This compares to a pre-war average of 18 million barrels per day recorded between March 2025 and February.

Brent eases as supply fears fade, but Middle East risks linger

Analysts at Rabobank note that Brent crude prices have “retreated last week as improved Hormuz flows and the partial restoration of Saudi Arabia’s East-West pipeline eased supply concerns,” highlighting a tentative normalization in physical market conditions. However, they caution that “the deployment of another aircraft carrier to the Middle East threatens to disrupt the recent recovery,” underscoring that geopolitical risk remains a key potential brake on the recent pullback in prices.